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Iran and Us Relations

International Relations Between Iran and the United States | |Group Paper | | | |Jorge Goytizolo, Donna Linares, Reuben Mateus | |INB3550 – International Business | |Dr. Veronica Diaz, Professor | |10/10/2010 | | | We intend to present how both countries; Iran and the United States, are affected economically by the disagreeable relationship they have forged, which has further worsened due to the United Nations Security Council having added additional sanctions to Iran. Content will include: History of the US and Iran domestic and business relations.

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o Iran’s OPEC affiliation and history along with current Iranian decisions which are affecting its approach to business relations with the United Nations and the rest of the world. o United States affiliation with the United Nations and how our latest decision towards Iran is affecting the UN and its approach to the business policies with Iran. o US and Iran International Business approach to the world. o Direct US and Iran Relations. History of the US and Iran domestic and business relations. The History of United States-Iran relations date back to the 1800’s, but has become more volatile in just over the last half century.One cannot discuss United States-Iranian history without observing the 1953 Coup, which has been cited as the “turning point” in United States-Iran relations. The 1953 Coup was a covert operation headed by America’s Central Intelligence Agency and has been documented as the Agency’s first successful overthrow of a foreign government. The Aim of the 1953 Coup, code named Operation AJAX, was to bring to power an Iranian government “which would reach an equitable oil settlement, enabling Iran to become economically sound and financially solvent, and which would vigorously prosecute the dangerously strong Communist Party” (Iran Chamber Society, n. d. ) “Early in the 1960’s, the Shah of Iran, announced social and economic reforms but refused to grant broad political freedom.Iranian Nationalist condemned his United States supported regime and his westernizing of Iran. During rioting in 1963, the Shah cracked down, suppressing his opposition. Among those arrested and exiled was a popular religious nationalist and bitter foe of the United States, the Ayatollah Ruhollah Khomeini” (Jimmy Carter Library ; Museum, 2006). During his United States backed reign, the Shah spent billions of oil dollars on military weapons, but soon began to lose popular support. “Unable to sustain economic progress and unwilling to expand democratic freedoms, the Shah’s regime collapsed in revolution” (Jimmy Carter Library & Museum, 2006), causing him to flee January 16, 1979.With the departure of the Shah, the exiled Ayatollah Ruhollah Khomeini returned to Iran in February of 1979 bringing rabid anti-Americanism with him. Amidst rumor and fear of another United States led Coup and a return to power of the exiled Shah Reza Pahlavi, a group from the Iranian Student Union took matters into their own hands by seizing the American Embassy. Inside the American Embassy the students held 52 Americans hostage for 444 days. The United States responded by freezing billions of Iranian assets, including bank deposits, gold, and other property. This event became known as the 1979 Hostage Crisis. The 1979 Hostage Crisis had drawn domestic criticisms against President Jimmy Carter.Criticisms of President Carter further grew with failed rescue attempts of the American hostages, some of which resulted in the deaths of American Soldiers whose bodies were paraded in front of television cameras by angry Iranians. This political nightmare prevented President Carter’s bid for re-election and promptly came to a close the day President Ronald Regan was inaugurated January 20, 1981. The Iran-Iraq War, which lasted from 1980-1988, played a significant role in United States-Iran relations. The United Nations Security Council issued resolutions calling for all its member states to avoid from contributing to the Iran-Iraq conflict, and is why the United States initially decided to take a neutral position.Although it had supplied both countries with weapons, the United States decided that an Iranian win would prove to be detrimental to their interests in the region and began to place their support behind an Iraqi Regime led by President Saddam Hussein. This support came in the form of loans, some of which benefited United States industries and all while the country of Iran was being hammered with many American enforced sanctions. In the 1990’s the United States placed more sanctions on Iran. In 1995, President Bill Clinton banned United States investments with Iran, prohibiting all commercial and financial transactions with Iran. This measure was unfortunate, as trade relations between the two nations had begun to increase after the end of the Iran-Iraq War.In 1996, the United States passed into law one of its most stringent measures to affect Iran, the Iran-Libya Sanctions Act. Designed to prevent Iran’s ability to get its hands on weapons of mass destruction and fund terrorist groups, the Iran-Libya Sanction Act imposed penalties on all foreign companies that provided investments over $20 million dollars for the development of Energy Sector (petroleum) in Iran. Any progress made in United States-Iran relations late in President Clinton’s second term was soon forgotten, as the new American President George W. Bush came into office. The events on September 11, 2001 have scarred relations between America and Iran to a point that appears irreparable.Although Iran was not involved in the 9/11 attacks, the United States feels Iran harbors and supports the terrorist who threaten America and it’s interests. The United States and Iran are not at war, but both countries have peppered each other over the last decade with rhetorical missiles. Some of the accusations include the fear of Iran’s nuclear weapons ambitions and its alleged membership to the “Axis of Evil”, while Iran feels the encroachment of United States military bases in the region provide reason for furthering armaments and political jousting. Despite each country’s contempt for each other the two countries continue to do business together. “U. S. Exports to Iran grew more than tenfold during President Bush’s years in office even as sponsoring terrorist” (Associated Press, 2008).The Bush Administration used sanction exemptions to ship a variety of goods to Iran ranging from perfume and fur clothing to cigarettes and bull semen. Both the United States and Iran joined the United Nations on October 24, 1945, however the United States represents 1 of 5 permanent members of the United Nations Security Council and Iran is currently not even a non-permanent member. Although Iran is not a member of the Security Council, it has two powerful allies in China and Russia who are permanent members. The latest decisions towards Iran have obviously been affecting the regulations now imposed by the United Nations Security Council. Sanctions issued by the Security Council are primarily intended to disrupt progress in Iran’s ability to obtain nuclear weapons and build it’s military.United States Ambassador to the United Nations Susan Rice announced at the Security Council meeting that the resolution will target 40 entities and one individual, Javad Rihiqi, head of a nuclear center where the Iranian government possesses uranium. It was reported that China, one of Iran’s largest trading partners, had pushed back on more stringent language, saying that broader restrictions – especially those targeting Iran’s Central Bank –would “harm Iran’s day-to-day economy” (Wagner, 2010). Russia has been reluctant to support United States backed sanctions, as Iran and Russia trade in the range of billions of dollars annually. From 2002 to 2008 Russia and China exported a combined 80 percent (by dollar value) of Iran’s arms.These sanctions are now being recognized not only within the United Nations Security Council, but also by financial powers, such as the European Union. Under the strain of sanctions and the Iran-Libya Sanction Act, some members of the European Union have been critical of the United States causing it to compromise on the first project cited as a violation of the Iran-Libya Sanctions Act by waiving sanctions on the 2 billion dollar project. “The Clinton Administration announced the waiver on May 18, 1998, citing national interest, after the European Union pledged to increased cooperation with the United States on non-proliferation and counter-terrorism” (Katzman, 2003).The Bush Administration decided followed suit with collaborative efforts with the European Union and its members to limit Iran’s nuclear ambitions and terrorism sponsorship, preserving the path for future sanction waivers. Iran’s OPEC affiliation and history |Iran’s OPEC Affiliation began early in the 1960’s,when a meeting request was made to the oil companies operating in Venezuela and in the | |middle east by the Venezuelan minister of mines and the Saudi Oil minister, to consult with the “hosting” countries before any price | |changes were made. Attending this meeting were the representatives of Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela. In that atmosphere,| |the foundation of the Organization of Petroleum Exporting Countries was formed. Hamilton, 1983) Currently, the Organization has a total of| |12 Member Countries. The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created | |at the Baghdad Conference on September 10–14, 1960, presently with its meeting headquarters located now in Vienna, Austria (OPEC, 2007). | |OPEC’s objectives still today is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable | |prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital | |to those investing in the industry (OPEC, 2007).Iran’s business relation in regards to its affiliation with the United Nations has been | |weakened in most part because of the correlation with the United States. Currently we have seen that the US has tried to prove time and | |time again that the monies directly benefiting Iran through their returns from the oil, and gas sector are being funneled into making the | |country a nuclear power (Alverez, 2009). Iran, OPEC’s second largest exporter with an output of 4. 2 million barrels per day, traditionally | |pushes for higher prices. It is also one of the most dependent on oil exports, with some 80 percent of its foreign revenue coming from oil | |sales (OPEC, 2007).In addition to this, Masoud Mir-Kazemi as Iran’s new oil minister stated in August that Iran plans to offer 5 billion | |Euros in bonds by 2015 to help Iran finance government projects (Nagaraj, 2010). This is indubitably leading the UN to assume the | |“projects” are those of a nuclear matter and are beginning to take steps in the agreement of sanctions until it can prove otherwise. | |Business relations with the United Nations | |The U. N. Security Council approved a resolution calling for a new round of sanctions aimed at pressuring Iran on its nuclear program. The | |measure passed with 12 countries voting for it, Brazil and Turkey voting against and Lebanon abstaining (Wagner,2010).Mir-Kazemi said his | |country already sold some 250 million Euros ($342 million) bonds in foreign markets. He also said the countries which pursue the sanctions | |have managed only to deprive themselves of the chance to tap into some of the world’s largest proven reserves of conventional crude oil. | |“If they want to have a secure long-term energy supply, they have to invest in Iran’s oil industry,” he said (Nagaraj,2010). Iran well | |aware of its abundant natural resource knows it has negotiating power. They continually stand by the fact that they state the nuclear | |significance is only linked to bettering its country’s infrastructure with plants to provide power and energy .In 2009, the 25-3 vote by | |the International Atomic Energy Agency, the UN’s nuclear watchdog, was then seen as a sign of deepening exasperation over the impasse when | |they stated that Iran had the right to generate nuclear power for peaceful purposes, which is what is says it wants to do (Alverez, 2009). | |It has been asked by the IAEA to discuss evidence of warhead-related research activities but has refused. Having been caught cheating in | |the past, its repeated denials have little credibility (Alverez, 2009). This is where the UN has its most concerns focused on. | |The UN wants more transparency to this project and with Iran denial to the inspections; they then feel pressed to pursue the newer | |sanctions.The resolution puts in place travel bans and financial restrictions on individuals and entities involved in Iranian nuclear | |and/or ballistic missile activities, including those owned, controlled or acting on behalf of Iran’s elite Revolutionary Guard Corps. It | |also includes an arms embargo and pushes for inspection of ships suspected of carrying cargo that may be involved in Iran’s nuclear program| |(Wagner, 2010). | |With a history stemming back almost more than a quarter of a century the latest round of imposed sanctions on Iran by the US have been the | |toughest we have seen yet. These sanctions are now being recognized not only within the Security Council of the UN but also by financial | |powers such as the EU.These entities continue their efforts trying to persuade all countries financial institutes not to deal with Iran. | |US and Iran International Business approach to the world | |United States and Iran have two totally different approaches. United States promotes open markets, competitiveness and innovation. United | |States also promotes sustainable development and corporate responsibility, supported by international engagement and prudent regulation. | |All these activities and efforts are monitored and guided by the USCIB (United States Council for International Business).As the whole | |world is trying to move from recession, United States promotes open markets along with competitiveness and innovation; we can see it in all| |the international summits, meetings in which United States participates. An example of this was when United States (USCIB) took the leading| |role n the G8 business summit in Italy. United States also was one of the participants of the G20 business summit in London in which the | |world’s largest economies agreed to a $1. 1 trillion package of measure to restore growth, jobs and rebuild confidence and trust in the | |financial system. All these countries including United States came together to fight the economy recession. United States has the same | |ideas and goals towards international businesses and wants to make it work around the world. |On the other hand we have Iran that overshadowed all the efforts for world progress and development by not being in compliance with its | |international obligations and announcing the development of its nuclear program. | |Iran’s approach to international business is little. Iran is part of the OPEC, which we had previously discussed. The main reason why | |Iran’s does business with other countries is to aid its goals in becoming a powerful nuclear country. The reason why Iran’s is so hungry | |for nuclear power is because it feels the need to protect itself against the development of capitalism, especially in other countries such | |as like the ones geographically close (Israel). Iran’s government is linked to the country religious beliefs.New movements within the | |country itself are trying to change this approach towards the world by gearing and convincing its citizens that capitalism will help the | |country get out of their financial crisis. Unfortunately, Iran, like many other countries, is being divided by two social classes; the | |educated and professional middle class and the laborers or poor class. The laborers or poor class are the majority on this country; they | |support the actual government (President Mahmoud Ahmadinejad) and his decisions. Once Iran and its citizens make the decision that opening | |up and cooperating with the world they may realize that it would improve their country’s establishment. |Direct US and Iran Business Relations | |Based on the research made by a renown New York times reporter and veteran correspondent, Stephen Kinzer; he recommend the alliance of | |Iran, United States and Turkey would the best way to increase the business and politics relations between these 3 countries. He stated that| |it would be a radical new course for the United States in the Middle Eastern region. The United States need to partner with Iran and Turkey| |to create a “powerful triangle” whose activities would promote a culture democracy and combat extremism. This is a debatable argument. At | |this time we have Iran, rule by radical ideologies and have set its mind on a burgeoning nuclear program.As we all know this one of United| |State government’s biggest headaches. Stephen Kinzer also reiterated that we have to remember that although Turkey is a long time United | |States ally, their relations has been deteriorated in the past years. An example of this deterioration it can be seen on an incident placed| |on last June where the relationship between these two countries was tested, Turkey’s representative on the UN Security Council voted | |against United States regarding backed sanctions on Iran. At this moment most of the United States government is asking themselves “Who | |lost Turkey? ” rather than envisioning more extensive cooperation with this country. | |Even hough United States and Iranian relations are a long term project and the idea has ample grounding in the modern history and politics| |of the region; unlike other Muslim countries Iran has a century worth of experience struggling for political freedom, during which they | |“developed an understanding of democracy and they are longing for it”. | |Unites States and Iran do share some fundamental values. Both countries have educated middle class, as we all know the middles classes are | |the basis for a strong civil society and also the two countries share strategic goals. Some of these common goals are the desire to see | |Iraq and Afghanistan stabilized and to suppress radical movements such as the Sunnis and Al Qaeda. |Though this alliance or relations would not be achieve at this moment or in today’s worlds until Iran changes dramatically and turn into | |democracy before any relations could be formed. | |One way this relation could happen still unclear but in the meantime Stephen Kinzer proposes a twofold strategy: engage with the current | |regime as effectively as possible and wait for the day democratically minded masses make their way to power. Though there are some | |processes of engagement in the Obama administration’s stated policy; Kinzer urges Washington to be bolder and to launch a “direct, | |bilateral, comprehensive, and unconditional negotiations with Tehran.This process of engagement was practiced by President Nixon and his | |diplomatic breakthrough with communist China when at the time of the US-Vietnam war Beijing was selling weapons to North Vietnam to kill | |Americans. Nixon recognized that “diplomacy works the opposite way. Agreement comes first; changes in behavior follow”. In order to | |“activate” the direct US relations with Iran, US diplomacy needs to give Iranians what they are looking for “respect, dignity and | |restoration of lost of pride” We have to remember us-USA is dealing with a nation ten times older than ourselves and the key to turn to | |better relationships with Iran is not to make Iran’s regime feel more threatened; it is to make it feel more secure. | | | | | | | | References Akyol, M. (2010, September). An unlikely trio. Foreign Affairs, 89(5), 124-129. (Akyol, 2010) Alverez, J. (2009). In the era of a new presidency, a new us. policy towards the united nations? : us policies towards and in the un security council. ISIA Journal of International ; Comparative Law, 15(319), 228-231. Associated Press. (2008, July 8). Despite Conflict, U. S. Does Business with Iran.Retrieved September 23, 2010 from http://www. msnbc. msn. com/id/25588135 Hamilton, J. (1983). Oil and macro economy since World War II. Journal of Political Economy, 91(2). Harvey, C. , Sabatini, R. (2010, April 15). Russia’s Lukewarm Support for International Sanctions Against Iran: History and Motivations. Retrieved September 23, 2010 from http://www. nti. org/e_research/e3_russia_lukewarm_sanctions_against_iran. html Iran Chamber Society. (n. d. ). A Short Account of 1953 Coup. Retrieved September 23, 2010 from http://www. iranchamber. com/history/coup53/coup54p1. php Jimmy Carter Library & Museum. (2006, February 9). The Hostage Crisis in Iran.Retrieved September 23, 2010 from http://www. jimmycarterlibrary. gov/documents/hostages. phtml Katzman, K. (Updated 2003, July 31). The Iran-Libya Sanctions Act (ILSA). Retrieved September 23, 2010 from http://fpc. state. gov/documents/organization/23591. pdf Kinzer, S. (2010). Iran, Turkey and America’s future. Time Books, 274 London Summit. (2009). Summit Outcomes. Retrieved from: http://www. londonsummit. gov. uk/en/summit-aims/timeline-events/summit-outcomes McMahon, Robert. (Updated 2006, April 4). Iran, the United Nations, and Sanctions. Retrieved September 23, 2010 from http://www. cfr. org/publication/10222/iran_the_united_nations_and_sanctions. html Nagaraj, A. (2010).Iran has some of the world’s richest oil reserves but has not been able to fully utilize it due to production and refining constraints. International Business , Retrieved from http://www. ibtimes. com/articles/64168/20100921/us-un-sanctions-turkey-iran-middle-east. htm Nasr, V. (2009). The rise of Islamic capitalism: Why the new Muslim middle class is the key to defeating extremism. New York, NY: Free Press. The National Security Archive. (2003, February 25). Shaking Hands with Saddam Hussein: The US Tilts toward Iraq, 1980-1984. Retrieved September 23, 2010 from http:www. gwu. edu/~nsarchive/NSAEBB/NSABB82/ (References continued) OPEC. (2007, April 29). Member countries.Retrieved from http://www. opec. org/opec_web/en/ on September 18, 2010 Wagner, A. (White House Correspondent). (2010). United nations security council backs new sanctions on iran. [Web]. Retrieved from http://www. politicsdaily. com/2010/06/08/iran-united-nations-sanctions-and-the-new-world-order/ Nova Southeastern University Farquhar Center for Undergraduate Studies Business ; Administrative Studies Division Assignment for Course: INB 3550 International Business Submitted to: Dr. Veronica Diaz Submitted by: Donna M Linares, on Behalf of Group : Jorge Goytizolo, Donna Linares, Reuben Mateus 9118 Palos Verde Dr Orlando FL 32825 07-625-1854 NSU N00717427 Date Submission Due: October 9th 2010 Title of Assignment: Group Paper Project CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas, or words, either quoted directly or paraphrased. I have added quotes whenever I used more than three consecutive words from another writer. I also certify that this paper was prepared by me specifically for this course. Student’s Signature: ___DM Linares__________________ Instructor’s Grade on Assignment: Instructor’s Comments: